Moments ago, members of the Greek government, which likely won't last long once the thorny issue of "math" returns and not even selling Bills to local banks (which promptly repo said Bills back to the Greek central bank) so the country can fund its payment to the ECB via an ECB guaranteed ELA payment from a Greek central Bank (confused yet) satisfies the New Normal ponzi math, made a strong statement: the country will not let any more public workers go:
- VENIZELOS SAYS STICKS TO PLEDGE NO LAYOFFS IN PUBLIC SECTOR
- KOUVELIS SAYS CAN'T ADD MORE UNEMPLOYED TO RANKS
The reason for this pledge is obvious: the last thing the country's new rulers need is more anger in the ranks as people demand a new government, which in turn will bring back Drachma redenomination risk. So what is the Greek solution instead? Simple: enter the labor pool, or the Greek version of the Permanent Paid Vacation, or akin to America's 99 weeks of unemployment benefits.
From the WSJ:
Greece may have to place thousands of public workers in a special labor pool at reduced pay to help achieve as much as €4 billion ($4.95 billion) in spending cuts demanded by international creditors, a politically risky move for the fragile coalition government.
Athens has yet to finalize a significant amount of the cuts that are part of an overall €11.5 billion austerity package demanded by international creditors, Finance Minister Yannis Stournaras said Tuesday, and the government is considering setting up a special labor reserve pool for public-sector workers to help meet that goal.
Among the thorny issues the new coalition government has yet to resolve in its bid to streamline the public sector is a previous commitment to place tens of thousands of public-sector workers in a special labor reserve at reduced pay—a move that many see as a step toward outright layoffs.
"The numbers are not easy to find; the €11.5 billion is a significant number and we are not there yet. We are short by about €3.5 billion to €4 billion," Mr. Stournaras told reporters after meeting with President Karolos Papoulias to brief him on economic developments and recent meetings with the troika of Greece's international creditors—the European Commission, the European Central Bank and the International Monetary Fund.
Of course, this being Greece, means that the plan to pseudo-fire government workers will be an epic failure:
Under the latest bailout program, Greece has committed to shedding some 15,000 public workers by the end of this year. Previous efforts to create a labor pool, under which 30,000 workers would have been laid off, fell well short of targets. In the end, only 1,000 were put in that pool, while 9,000 civil servants took early retirement.
Mr. Stournaras said there will be no compulsory public-sector layoffs, though he said plans for the labor reserve pool are still being considered. "On the issue of the labor reserve pool, we will see. The negotiations are continuing and will continue until the end of August," he added.
In the meantime, everyone is on vacation, most likely somewhere in Santorini (the Goldman bankers on location call it "due diligence" and get everything expensed).
The troika is to return to Athens in early September to finalize its review of the Greek economy and assess if the country's delayed reform plan is on track, after back-to-back elections in May and June created a period of political limbo, before giving the green light on the next tranche of bailout money.
Just as certain as the labor pool program being a failure is that the Troika will find the total collapse in the economy being even total-er. But by then Greece will be on its own, allowed to funds itself via the same convoluted ponzi mechanism we described in the beginning, where week after week, the country will exhaust all eligible collateral available for ELA purposes, only the have the ECB allow the Greek Central Bank to finally accept salt water in exchange for euros.